China's manufacturing picks up the pace

U.S. stocks advanced, oil gained for the first time in four days and Treasuries fell as Chinese factory gauges signaled expansion. Gold rose to a three-month high and the ruble (CME:R6N14) weakened as Ukraine ended a cease-fire.

The Standard & Poor’s 500 Index (CME:SPU14) climbed 0.3% at 9:31 a.m. in New York, poised for a record close after capping a sixth quarterly advance. The Stoxx Europe 600 Index added 0.6% after its fourth quarterly gain. The yield on 10-year Treasuries (CBOT:ZNU14) added three basis points to 2.56%. Gold (COMEX:GCN14) rose 0.4% as the dollar (NYBOT:DXU14) fluctuated near a seven-week low against a basket of 10 major currencies. West Texas Intermediate oil (NYMEX:CLN14) increased 0.5% and corn (CBOT:ZCN14) headed for the biggest two-day decline in a year.

China’s manufacturing expanded in June at the fastest pace this year, data showed today before a report that will probably indicate growth in U.S. factory output, according to economists surveyed by Bloomberg. Ukraine refused to extend a truce, vowing to retake the country’s easternmost regions as peace efforts faltered. Iraqi political leaders are set to gather today without agreeing on a prime minister as the U.S. sent more troops to Baghdad to protect American personnel.

“The market is very resilient,” Steve Krawick, president of West Chester Capital Advisor Inc. in Johnstown, Pennsylvania, said in a phone interview. The firm oversees about $900 million. “We had some crisis in Ukraine and the Middle East, but our economy has been stable. We realize the fact that valuations are not cheap, but that doesn’t translate into the end of the bull market.”
 

Quarterly Results
 

The S&P 500’s streak of quarterly gains, its longest since 1998, came as global stocks rallied in the past three months. The MSCI All-Country World Index jumped 4.3% for a fourth straight gain, while MSCI index of emerging-market equities climbed 5.6%, its best quarter since September 2012. The Stoxx 600 in Europe added 2.3%.

Gold advanced today after the metal capped a second quarterly advance, according to Bloomberg generic pricing. Bullion had surged 10% this year on tensions in Iraq and Ukraine, while the Federal Reserve has said that interest rates will stay low for a “considerable time.” Oil gained 3.7% in the second quarter, extending a 3.2% rally in the first three months.

In China, manufacturing expanded in June at the fastest pace this year, data today showed. The Chinese Purchasing Managers’ Index was at 51.0, the National Bureau of Statistics and China Federation of Logistics and Purchasing said, matching analysts’ median estimate and increasing from May’s 50.8. A similar index from HSBC Holdings and Markit rose to 50.7 from the previous month’s 49.4.

Markets in Hong Kong were closed today and the Shanghai Composite Index added 0.1%.
 

U.S. Manufacturing
 

A report from the Institute for Supply Management at 10 a.m. New York time will probably show its manufacturing gauge increased to 55.9 in June from 55.4 the previous month, according to the median economist estimate. That would be the highest reading of 2014.

The S&P 500 climbed 1.9% in June for its fifth straight monthly increase, closing within three points of its all-time high reached June 20. The index trades at 16.6 times the projected earnings of its members, close to its highest valuation in four years.

The index has gained 6.1% this year, as data from employment to housing fueled confidence that the U.S. economy is rebounding after the worst contraction in gross domestic product since 2009. Fed Chair Janet Yellen said on June 18 that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth.

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